The Biden Administration is targeting the industries and companies that are most affected by high inflation, from greedy meatpackers to oil and gas companies.
In an interview this week, Secretary of Commerce Gina Raimondo linked another industry to the problem, drawing a direct correlation between inflation and the shortage of semiconductors, the computer chips needed to manufacture automobiles.
The last 12 months, the automobile sector has been a major cause of inflation: Between December 2020 and December 2021, the prices for new vehicles jumped 11.8% and the prices of used cars increased by 37.3%.
Inflation for all items was 7%, the fastest year-over-year increase since 1982.
Raimondo said that business leaders agree with the assessment, and that the auto price goes up because car companies can't get their hands on enough chips.
The supply of cars is going to come down, so we need to increase the supply of cars. Raimondo told Yahoo Finance's editor-in-chief, Andy Serwer that in order to do that, we need an increase in semiconductor chips.
Raimondo, a former governor of Rhode Island, said that the chip shortage is not just hurting pocketbooks, it's a national security concern.
She said that if you have time for a really scary read on how dependent the United States is on other countries, especially Taiwan, for our supply of semiconductors, it's worth it.
The U.S. role in semiconductor manufacturing has fallen from 40% in 1990 to 12% today, according to a report from the Semiconductor Industry Association. The situation is even worse with the world's most advanced logic semiconductors, 100% of which were manufactured overseas in 2019.
There are times when suppliers wonder who's hoarding, who's stockpiling, and that's why Raimondo pointed out to a need for transparency in the industry. How does the U.S. solve its semiconductor problem?
The Congress needs to act, Raimondo says. It's stalled in Congress, to be honest. The Senate passed the CHIPS for America Act last June and awaits a vote in the House, and includes $52 billion for prod semiconductor companies to base fabrication plants in the U.S. If lawmakers send the money, Raimondo said that her Department will work with semiconductor companies to set up shop in America, making chips in America. That program would reach American semiconductor companies like Nvidia NVDA Intel INTC and Micron MU, as well as foreign companies in allied countries like Samsung and the Taiwan Semiconductor Manufacturing Company.
Raimondo said that they want to hire Americans in America to make this stuff on our shores.
Inflation is a front-burner issue for voters heading into the midterm elections, according to a recent AP-NORC poll showing that voters are more concerned with inflation and less worried about the coronaviruses. Another poll shows three in five voters pin the blame on the president over corporate America, a bad news for the Biden administration.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.